An open economy with worldwide connections

Global ties help make our nation prosperous. Our success comes from being an open and adaptable trading nation that is deeply connected to the global economy. Trade contributes over 40% of Australia’s GDP, with services and digital trade emerging as important areas of trade growth.

Australian trade is hard-wired into the fastest-growing countries. Seventy-five per cent of our trade is with dynamic economies in the Asia region. Preferential access to Asian markets also makes us a natural springboard for global companies.

We are a migrant nation. This helps us stay engaged with all parts of the world. Around 29% of people in Australia were born overseas, and nearly half of Australians say that at least one parent was born overseas. Over a fifth of Australians speak a language other than English at home.

While Australia has been a net-capital exporter in recent years, foreign investment continues to power our major industries. Foreign direct investment (FDI) has grown by approximately 7% per year over the last decade and has now topped A$1 trillion.

Australia actively seeks new trading opportunities. We have 17 free trade agreements (FTAs) and have led the formation of multiple, regional trade agreements in the Asia-Pacific, including the Regional Comprehensive Economic Partnership (RCEP).

We haven’t stopped there. Our newest agreement – the Australia-India Economic Cooperation and Trade Agreement – connects Australia with one of the world’s fastest-growing economies. Arriving shortly is a comprehensive FTA with the UK, which expands opportunities for trade and investment with a historical trading partner.

Shipping containers

Asian markets drive export success

Close integration with dynamic economies in Asia drives wealth creation in Australia. Twelve of Australia’s top 15 export markets are in the Asia region.1 They attracted exports worth A$472 billion in 2021–22. This represents almost 80% of Australia’s total exports of goods and services. China currently receives around 30% of our goods and services exports. More than 40% of our exports go to Japan, Korea, India, the US, Taiwan and Singapore. The Association of Southeast Asian Nations (ASEAN) is also a significant bloc for Australian trade. It accounts for 12% of Australia’s total exports.

australias-top-15-export-markets-2021-22

Note: 1. The Asia region is defined as economies located in Asia and Oceania, and excludes the Middle-East region.
Sources: Department of Foreign Affairs and Trade, 2023, Trade statistics, Australia’s trade in goods and services: 2021–22, accessed 18 January 2023; Austrade.

Trade tops A$1 trillion

Australia is a highly globalised economy. Trade represents around 45% of Australia’s economy. Our partners in the Asia region accounted for almost 75% of our total goods and services trade in 2021–22⁵: This reflects Australia’s geographical good fortune and our trade agreements with regional economies. China remained Australia’s largest trading partner in 2021–22, accounting for 27% of our two-way trade. Japan and Korea account for a further 18%. Many Australian companies are diversifying their export markets, and the ASEAN region now accounts for 14% of total trade. Meanwhile, Australia maintains strong links with traditional partners. The EU and the UK accounted for 11% of total trade in 2021–22, and the US for 7%.

Australia's exports and imports of goods and services

Current prices (A$ billion)

Rank Selected economies 2019-20 2020-21 2021-22

 Percentage
of GDP in
2021-22

 Share (%) of
total in
2021-22		 5 year CAGR (%)
1 China  251.0 267.0  284.8  12.3 27.0 10.3
2 Japan  79.1 66.9 117.2 5.1  11.1 11.3 
3 US 80.9  67.5  76.4  3.3  7.2  2.8 
4 Korea 38.9  39.5  68.7  3.0  6.5  12.2 
5 Singapore 31.2  28.3  46.8  2.0  4.4  13.6 
6 India 26.2  27.1  46.3  2.0  4.4  12.4 
7 Taiwan 18.9  17.2  33.8  1.5  3.2  18.1 
8 Malaysia 21.6  21.1  26.8  1.2  2.5  6.2 
9 Germany 22.1  22.2  26.5  1.1  2.5  4.9 
10 New Zealand 28.6  23.6  25.5  1.1  2.4  -0.8 
11 Thailand 21.6  20.9  24.6  1.1  2.3  2.4 
12 Vietnam 15.2  15.8  22.1  1.0  2.1  13.2 
13 UK 36.8  28.6  22.0  1.0  2.1  -4.6 
14 Indonesia  16.1 14.1  18.3  0.8  1.7  2.0 
15 Hong Kong SAR 13.2  11.1  14.1  0.6  1.3  -6.5 
  Other economies 174.0  158.5  202.6  8.8  19.2  4.9 
Total all economies1 875.6   829.5 1,056.6  45.8  100.0  7.4 
  By regions and groups            
  APEC2 645.2  617.7   790.0 34.2  74.8  8.4 
  RCEP3 511.5  505.8  647.1  28.0  61.2  9.6 
  ASEAN4 113.8  108.8  150.9  6.5  14.3  8.3 
  EU plus UK 116.0  106.4  119.0  5.2  11.3  3.3 
australia-exports-and-imports-of-goods-and-services

Notes: 1. Totals may not always add up exactly due to rounding. Refer to the DFAT website (www.dfat.gov.au/trade/Pages/trade-and-investment) for more information. 2. Asia Pacific Economic Cooperation. 3. Regional Comprehensive Economic Partnership. 4. Association of Southeast Asian Nations. 5. DFAT defines the Asia region as economies located in Asia and Oceania, including the Middle East region. For more information, visit www.dfat.gov.au/trade/resources/trade-statistics/Pages/trade-time-series-data.

CAGR = compound annual growth rate.
SAR = Special administrative region of China.

Sources: Department of Foreign Affairs and Trade, 2023, Trade time series data; Australian Bureau of Statistics, 2023, Australian National Accounts: National Income, Expenditure and Product, Table 3; Austrade.

A high-growth destination for A$4.4 trillion of foreign investment

Foreign direct investment (FDI) in Australia is growing fast. The total stock of FDI in Australia has risen by an average 8.1% per year since 2001–02. Other forms of foreign investment – including portfolio investment – grew by 8.3% per year on average during the same period. This has taken the level of total foreign investment in Australia to A$4.4 trillion. Investment is becoming more important to the Australian economy. As a percentage of GDP, the total value of foreign investment stock grew from 123% in 2001–02 to almost 200% in 2021–22.

total-foreign-investment-stock-in-australia

Note: 1. Other investment is the balance of total investment less direct investment. As such, it represents portfolio investment, financial derivatives and other investment categories from the source ABS data.

Sources: Australian Bureau of Statistics (ABS), 2023, Balance of Payments and International Investment Position, Table 15; ABS, 2023, Australian National Accounts: National Income, Expenditure and Product, Table 3; Austrade.

A magnet for investment from North America, Europe and Asia

Australia attracts investment from around the world. Over the past decade, foreign direct investment (FDI) from China has risen on average by 12% each year; from Canada by 12%; from Japan by 9%; and from Singapore by 9%. Australia’s top three overseas investors are the US, Japan and the UK, with stock holdings equivalent to 17%, 13% and 12% of total FDI respectively. Over the same period, investment activities from ASEAN countries – mainly Singapore and Malaysia – have grown by an average of 9% per annum to A$66 billion. The ASEAN bloc is now the fourth largest source of FDI in Australia.

Australia's main sources of foreign direct investment stock, 2011–2021

Total value in 2021: A$1 trillion

Rank
2021		 Economy 2011
A$billion		 2020
A$billion		 2021
A$billion		 % Share
2021		 % Change
2020-2021		 % CAGR
2011-2021		 % of Australian GDP, 2021
1 US 116 194 185 17.4 -4.8 4.8 8.5
2 Japan 55 132 134 12.6 1.2 9.3 6.2
3 UK 66 123 128 12.0 3.5 6.8 5.9
4 Canada 19 46 58 5.5 24.8 11.8 2.7
5 Netherlands 30 53 55 5.2 4.9 6.4 2.5
6 China 14 46 46 4.4 1.6 12.3 2.1
7 Singapore 20 40 46 4.4 16.6 8.8 2.1
8 Bermuda 6 40 40 3.8 0.6 21.3 1.9
9 Virgin Islands, British np 22 22 2.1 0.4 np 1.0
10 Germany 14 22 20 1.9 -7.5 3.7 0.9
11 Hong Kong SAR 8 16 17 1.6 3.5 8.3 0.8
12 Malaysia np np 14 1.3 np np 0.6
13 Switzerland 23 12 13 1.2 6.6 -5.7 0.6
14 France 7 12 12 1.1 -2.8 5.1 0.5
15 Luxembourg 3 11 10 0.9 -13.9 11.0 0.4
16 Korea np 7 7 0.7 9.0 np 0.3
  Other economies 166 255 255 24.0 -0.3 4.3 11.7
  FDI stock – all economies 547 1,032 1,062 100.0 2.9 6.9 48.8
  OECD 359 640 650 61.3 1.7 6.1 29.9
  APEC 248 506 518 48.8 2.4 7.7 23.8
  EU 72 118 120 11.4 1.8 5.3 5.5
  ASEAN 28 58 66 6.2 12.6 8.9 3.0
  FDI stock as a percentage of GDP 37.3 52.4 48.8        

Notes: ASEAN = The Association of Southeast Asian Nations. CAGR = compound annual growth rate. SAR = Special administrative region of China.

Sources: Australian Bureau of Statistics (ABS), 2022, International Investment Position, Australia: Supplementary Statistics 2021, Table 2; ABS, 2022, Australian National Accounts: National Income, Expenditure and Product, Table 3; Austrade.

FDI powers growth in Australia’s services sector

Investment powers productivity growth in Australia’s domestic and export industries. Services take about half of all foreign direct investment (FDI). From 2017–2021, FDI in real estate and financial services – the two largest recipients in the services sector – rose by 11% and 12% per year respectively. This growth is more than double the average (4%) across all industries. FDI in the professional, scientific and technical sector has also grown rapidly, at 17% per year since 2017. Australia’s export-focused mining sector is the biggest primary-industry beneficiary of investment, accounting for 34% of total FDI, or A$361 billion.

foreign-direct-investment-stock-in-australia-by-industry

Note: np = not available for publication but included in totals where applicable. 1. Other includes Agriculture, forestry and fishing ($3.9 billion); Public administration, Activities of households and of extraterritorial organisations (np); Education (np); Human health and social work activities ($5.2 billion); Arts, entertainment and recreation (np); Other service activities (np); and Unallocated ($121 billion).  

Sources: Australian Bureau of Statistics, 2022, International investment position, 2021, Australia: supplementary

An open trading economy for services

Australia is an open market for trade in services. According to the OECD’s Services Trade Restrictiveness Index (STRI), Australia scored 0.19 across 22 sectors in 2021. This was lower than the OECD average (0.23).1 and indicates a high level of openness to trade. The index ranked Australia as the second most open economy for legal services, and the fifth most open for air transport. Trade in services is growing strongly. Two-way trade reached around A$133 billion in 2021-22, representing an increase of 20% from 2020-21.

 
services-trade-restrictiveness-index-by-sector-australia-vs-oecd-average

Notes: 1. Unweighted STRI average of 38 OECD countries. 2. The number in brackets indicates the Australia’s global ranking across 38 OECD countries.

Sources: Australian Bureau of Statistics, 2022, International Trade in Goods and Services; Organisation for Economic Co-operation and Development, 2022, Services Trade Restrictiveness Index, accessed January 2023; Austrade

A broad network of trade agreements

Australia has 17 Free Trade Agreements (FTAs), including agreements with the United States, China, Korea, Japan and Singapore. Australia is also a member of regional multi-party trade agreements, including the Regional Comprehensive Economic Partnership Agreement (RCEP) and the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA). During 2022, the Australia-India Economic Cooperation and Trade Agreement (ECTA) came into force. Australia and India are in the process of concluding a Comprehensive Economic Cooperation Agreement, which will build on ECTA’s market access outcomes. In 2021, we agreed the Australia-United Kingdom Free Trade Agreement (A-UKFTA), which will likely be implemented during 2023.

 
Australias-free-trade-agreements

 

 Australia's multi-party free trade agreements
 

ASEAN-Australia-New Zealand FTA (2010-11)

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (2018-19)

Regional Comprehensive Economic Partnership (2022)
New Zealand  • •
 •
Indonesia •
•
Brunei • •
Singapore •
 • •
Malaysia •
 •
 •
Thailand •
•
Philippines •
Vietnam • • •
Cambodia • •
Laos • •
Myanmar •
China •
Korea •
Japan •
 •
Canada •
Mexico •
Peru •

Notes: 1. Information on the status of FTA negotiations can be found here: https://www.dfat.gov.au/trade/agreements/trade-agreements 2. The Pacific Agreement on Closer Economic Relations Plus entered into force in 2020. Australia, New Zealand, Samoa, Kiribati, Tonga, Solomon Islands, Niue and Cook Islands are parties to the Agreement.

Sources: Department of Foreign Affairs and Trade, 2023, Australia’s free trade agreements; Austrade.